Archive for January, 2012

The bankers’ pay issue is not just about Stephen Hester’s bonus at RBS. A boycott is a way of tackling the systemic problems

Where next for the story of Stephen Hester’s bonus? On Sunday, two papers reported that the now-infamous £963,000 is only a fraction of his treasure-chest. Partly thanks to something called a “long-term incentive plan”, by this time next year he is likely to have been handed another £8m in shares, which will take his rewards since he took charge of RBS in 2008 to not far short of £40m.

But herein lies danger. It suits the imperatives of the news media to have such a huge issue boiled down to the rewards package of one man; it’s also in the interests of the privileged people who own whole swaths of the press and broadcast media to do whatever they can to ensure that such a reductive script is followed to the letter. In that context, note the perfect role played by the RBS chairman, Sir Philip Hampton, now given temporary sainthood for turning down his bonus of £1.4m. His intervention has done its work: the issue is now in danger of becoming about matters of character and choice, rather than anything systemic.

So, what to do? Clearly, the argument about high pay is in danger of turning cacophonous, and thereby meaningless. Canards and dead-ends abound: focusing on RBS threatens to restrict the debate to the morals of state ownership; “transparency” is a crock. Talking about “rewards for failure” nudges the issue away from basic inequality, and even limiting the conversation to the banks lets plenty of companies off the hook (witness Bart Becht, the one-time CEO of the firm that makes Cillit Bang detergent, in 2010 given a cash-and-shares package of £90m).

Moreover, huge amounts are said, and almost still nothing done. Faced with global practices, even the most well-intentioned politicians – Ed Miliband, Vince Cable – can only try and keep the issue on the agenda in the hope that openings will eventually appear for more convincing policy.

But Lest anyone succumb to fatalism, some interesting developments are afoot. The last two years have seen national and local campaigns in the US, encouraging people to move their cash away from big financial institutions and into small banks and local credit unions. A big fillip came with Bank Of America’s decision to charge customers a $5 monthly fee for using their debit cards – which resulted in as many people joining US credit unions in a single month as usually make the switch in a year, and played its part in that bank and others dropping the plan. The campaigns’ focus, of course, is much bigger than that – but the episode proved they were hardly wasting their time.

That there are problems with approach is self-evident: Bank Of America has 58 million customers, whereas the campaigns were cheering about the defection of hundreds of thousands. But, in the form of the Move Your Money project and the US Move Our Money, they are still there. The former builds it activities around the recognition that “little has changed to prevent another financial crisis or to end ‘too big to fail’”, and wants to encourage people “to take power into their own hands by voting with their dollars and no longer contributing to a financial system that has led our country astray”. The latter claims it has so far deprived big banks of around $57m dollars.

But more important than any figures is what these protests represent: a focus for outrage, as networked and agile as modern protest demands, that can keep the issues simmering away.

This week, a British version launches, with the support of Co-ops UK, along with some of the people involved in UK Uncut. They presumably know that the importance of high-street banking is dwarfed by the clout of the banks’ investment wings, but that doesn’t necessarily detract from the damage to their brands that can be wrought by such targeted protest.

Cynics will scoff and claim the politics of boycotts can be just as distracting as the non-debates embraced by politicians and the press, reducible to the salving of consciences rather than any actual change. But with what is left of Occupy currently quiet and introspective, and the Hester case proving that spasms of righteousness are no substitute for the politics of the long haul, this latest move offers something very welcome: at least one means by which the arguments about the obscenities of inequality can be kept in roughly the right place.

The LearnPlay Foundation worked with 5,000 neets last year. Not one dropped out. 85% of the money comes from the European social fund

In a room plastered with storyboard plans for computer games, teenagers are clustered around screens. Some are testing ideas, others learning about programming and design techniques. All are from deprived communities in the West Midlands. None would be here if it weren’t for the European Union.

Finding Britons to rhapsodise about the EU can be difficult. Not so at the LearnPlay Foundation, which gets the vast majority of its funds from the European social fund. “I don’t think our foundation could continue to exist unless we had those sources of money,” says Ro Hands, the managing director.

The LearnPlay Foundation is a visionary social enterprise in West Bromwich, a post-industrial town afflicted by last summer’s riots. Founded in 2007, its aim is to “make a difference to people’s lives using games-based technologies” – which entails seizing on the ubiquity of video games, introducing disadvantaged young people to the techniques that lie behind them, and sparking their creative impulses, with a view to altering the direction of their lives.

“Our whole raison d’etre is to work with people from the most deprived communities,” says Hands. “We offer them opportunities: employment opportunities, learning opportunities, accredited learning, work experience … pathways into doing creative and meaningful things that give them a real, tangible output.” The foundation prides itself on working with so-called neets – young people not in education, employment of training, a byword for British social failure – to reconnect them with both the education system and the job market.

For some young people, this is a question of placements at the foundation’s HQ, learning – among other things – programming and design techniques, and also soaking up much broader benefits: not least the appreciation of planning and teamwork, along with increased self-esteem. “I was just out on the streets really; I got arrested a couple of times,” one of LearnPlay’s beneficiaries tells me. “But this place gave me a creative outlook, about where I could go with design and gaming.”

The Foundation also runs outreach programmes, taking its work into the kind of communities where social problems run deep. “You can’t wag a finger and say, ‘That’s naughty – don’t do this’: lots of people involved in guns and gangs think that they represent their family, their protection mechanism,” says Hands. “But we get them doing projects that are creative. And that journey of creation helps them stop and look at their lives and the fact that they have got talents and abilities, and with the mentoring and guidance they can open up opportunities.”

There are two sides to the Foundation’s work: involving people in their teenage years in creating and developing games, but also spreading that work into the wider world, and aiming at other objectives. Games worked up by the foundation’s proteges are used in partnerships with primary schools, to improve literacy and numeracy. Pensioners use applications designed to allay the effects of dementia. And of late, carefully honed program have been piloted by police and social services in their work with the victims of trafficking and child abuse, as a means of opening up conversations that bring forth crucial evidence.

Inevitably, all of this requires money, which brings us to a particularly interesting question: how much of the foundation’s income comes from the European social fund?

“Right now, it’s about 85%,” says Hands. “We all know the political situation at the moment; we all know that government has limited lots of the money given to youth provision. So if we’re not getting money from them, we have to look further afield. You get to know what has to be done.”

Not surprisingly, the current burst of Euroscepticism causes her and her colleagues no little anxiety. “People take the sensational elements of the EU, and write about something like the size and shape of bananas – and that’s the stuff that Joe Public gets to hear,” she says. “And of course, that’s absolutely ridiculous. But there’s nobody saying, ‘Forget that: look at the other things Europe does for member states: look at the money that gets channelled and the things that happen.’ For us, it’s very simple: we’ve worked with 5,000 neets in the last year, and we haven’t had a single dropout.”

David Cameron’s support for entrepreneurs can’t hide the reality of self-employment, nor mask the erosion of proper jobs

Rejoice, rejoice. No matter that the economy shows little sign of revival: the petit bourgeois spirit that led Napoleon to malign us as a nation of shopkeepers seems in unprecedented health. Since the middle of the last decade, the number and proportion of self-employed Britons has been increasing, and the drastic events of 2008 did not slow the rise. Quite the reverse in fact, and thanks to a report last week by the Chartered Institute of Personnel and Development, we now know that by last autumn UK self-employment had reached 4.14 million: a record that will surely cheer up anyone who believes in hard work and self-reliance.

This week David Cameron will once again make a show of his support for an initiative called StartUp Britain, after paying tribute to its ethos in his “popular capitalism” speech last week: “If you take a risk, quit your job, create the next Google or Facebook and wind up a billionaire, then more power to your elbow.” The inestimable Richard Branson is also on the case, suggesting that the government start offering finance to young would-be entrepreneurs on the same terms as student loans. He appeared on Radio 4 last Friday: what, wondered the presenter of the World at One, if they end up not just bust, but with a mountain of debt? The answer was apparently beamed in straight from Necker Island. “I would recommend they just pick themselves up, learn from that failure, try again, and keep trying until they succeed,” he said.

As happened in the Thatcher years, we are awash with such talk, just when going it alone is more difficult than ever – and, moreover, the grim truth about most new self-employment has just been revealed. “The additional self-employed are unlike self-employed people as a whole in terms of gender, hours of work, occupation and sector of employment,” says the CIPD’s report. Tellingly, of those who make up the net rise in self-employment since 2008, 90% are part-time. Moreover, the report’s author, John Philpott, talks about people “without skills, picking up whatever bits and pieces of work are available”, whose emergence “hardly suggests a surge in genuine entrepreneurial zeal.”

All this has been boiled down to talk about a new crop of “odd-jobbers” – but there’s something more important going on, so far undocumented in official statistics: the accelerated conversion of proper jobs into a mess of “self-employment” that’s completely fraudulent. Eighteen months ago, two Daily Mirror journalists began a brilliant campaign on this issue titled “Gizza Proper Job“, and exposed such firms as Ryanair and the minicab firm Addison Lee; it has also been touched on by BBC1’s Panorama. That it remains a political non-issue says a lot about the current debate about the supposed fundamentals of the economy: politicians and the press will happily fume about either overpaid executives or ripped-off customers, but thinking about the nitty-gritty of working lives is still somehow beneath them.

“We are looking for a number of door supervisors, security guards and CCTV operatives,” says one typical online job ad. “You will be employed on a self-employed basis”. This from the suburbs of Bristol, and another trade long steeped in such sharp practice: “Self-employed hairdressers are required for a busy, newly opened and re-vamped Beauty Salon.” A lot of ads predictably push the supposed merits of “being your own boss” – but in most cases the boss is where he’s always been, only he’s found a neat new way of paying you less.

With unemployment so high, entering this world entails pay rates that often seem to be in freefall. At the heart of the self-employed economy in construction, for example, one 2010 survey recorded plummeting freelance wages, some down by as much as 50%. And the rest, we know. By definition, there’s no need for employers to pay national insurance, or provide sick pay, maternity leave or holidays; if you’re on commission, you won’t even get the minimum wage. Even bottom-rung pensions are likely to be off-limits. God help you if you are ill. And how you are meant to push your way into, say, home ownership is anyone’s guess.

The most grimly hilarious ad I found on a recent trawl read as follows: “Make £275 or more per trip as a Courier Driver, delivering same-day documents and parcels across the UK … Please note this is not a job, this is an self-employed business opportunity.” Lovely, that last turn of phrase. Where once were jobs are now “self-employment business opportunities” – though little chance, while you’re speeding around the country delivering other people’s parcels, of turning yourself into the next Branson, Sugar or Dyson.

The question is whether the mushrooming of this side of the job market will dwindle with the current crisis, or be embedded in the economy for good. Last week, one high-up from the Recruitment and Employment Confederation identified an increasing national trend “towards more freelancing and flexible working patterns” and also wondered whether we’re seeing “a lasting reconfiguration of the employment landscape in the UK”. From what we know about our old friend irresponsible capitalism, it’s surely a certainty.

Marmite, Pot Noodle, Persil and Walls among lines hit as Unilever workers go on strike in first of 10 days of action

The industrialist and Liberal politician William Hesketh Lever began building the Wirral village of Port Sunlight in 1888, 42 years before his family’s company amalgamated with a Dutch margarine firm to become Unilever. It may have predated the current obsession of the British political class with “responsible capitalism” by well over a century, but Port Sunlight embodied the same essential idea: Lever’s quest to “socialise and Christianise business relations” via beautiful housing and culture for all.

Had Lever come back to his home turf on Wednesday, he would presumably have been dismayed. Yards away from the old Lever Brothers factory and the village’s manicured lawns, a 100-strong picket line-cum-demonstration was in full cry.

This was the first act of a 10-day rolling strike involving 2,500 people, focused on an issue much beloved of Lever himself, and now firmly built into the national conversation: pensions. Having closed its final-salary scheme to newcomers in 2008 but assured its remaining beneficiaries that it would stay open for them (and increasing their contributions just to prove it), Unilever now wants to transfer its entire workforce to a less costly career average revalued earnings (or Care) plan. Following the lead set by numerous big corporations, the company claims final-salary schemes represent a “broken model”. But the unions point to huge profits and generous treatment of executives, and fear that the Care proposal will lead to much less dependable pensions arrangements.

There are shades here of the pensions dispute that has lately gripped the public sector, but no sign so far of any equivalent progress. Unions have proposed measures to save the final salary scheme, to no avail. The company says that its closure is non-negotiable, and talks have broken down. After a vote with a 67% turnout and 85% in favour of striking, the first national Unilever stoppage took place on 9 December last year, affecting a mind-boggling array of famous brands – and the latest plan drawn up by Unite, the GMB and USDAW once again reads like a wave of action sweeping through the shelves of a supermarket (or, if you prefer, something of an industrial soap opera).

At Purfleet in Essex, people walked away from the production lines responsible for Hellmann’s mayonnaise, I Can’t Believe it’s Not Butter and Flora. There was also a stoppage at the home of Colman’s mustard in Norwich. The action will hit Pot Noodle, PG Tips, Marmite, and Wall’s ice-cream. At Port Sunlight, people whose working lives are bound up with Comfort fabric conditioner and Persil liquid are scheduled to strike on Friday. On Wednesday, it was the turn of the same site’s R&D division. So there they stood: process technologists, prototype developers, formulation scientists, specialists in “bleach catalysis”, and more. They talked about cuts in their future retirement income of up to 20% – in some cases, say the unions, as much as twice that – and the company’s broken guarantees. But there were also complaints about increasing pressure on an ever-smaller workforce, and a massed lament for the legacy of the company’s British founders.

“It used to feel like an ethical company,” said 44-year-old Cathy George, a secretary and single mother who has worked for the company for 16 years. “But everything’s changed. It’s more ruthless now.”

“They used to look after us,” said Lesley Griffiths, 49. “They don’t any more. I’d say it’s changed in the last year.”

“The directors aren’t going to be affected by this, but we are,” offered another. “They say it’s only going to make a difference of 20%. But that’s a lot of money for us.”

So far, most of the coverage about the Unilever strikes has focused on the increasing rarity of final salary schemes, and the unions’ supposedly ill-advised attempt to cling to one. The strikers counter that such talk overlooks not just Unilever’s huge profits – £6.1bn at the last count, up more than £1bn on the previous year – but bad decisions taken in the recent past. Certainly, the company’s £680m pension fund deficit is at least partly traceable to its decision to fall in with corporate fashion during the boom years of the 1990s, and take a seven-year pension holiday for both company and staff that only ended in 2002.

There is also the question of whether a move to Care pensions will eventually be followed by Unilever’s staff being pushed into an even less generous scheme. Company documents obtained by Unite show that the Unilever’s global pensions policy enshrines defined contribution schemes (whereby the value of any pension is not guaranteed, but down to how much money has been paid in, how much a pension fund has grown, and the annuity rate available at retirement) as the company’s “preferred pension benefit design”. The company claim this is a “framework rather than a mandatory policy”, but the unions smell a rat: they say that Unilever will only commit to Care pensions for three years, which leaves the way open for yet another downgrade. For the last recorded financial year, Unilever’s CEO, Paul Polman, was paid a basic salary of more than £900,000, and a bonus of £1.45m, as well as £900,000 in free shares and a £300,000 contribution to – you’ve guessed it – his pension. But in November last year, he said this: “What I want is a sustainable and equitable capitalism. Why can’t we have that as a model?”

On the picket line at Port Sunlight, one Unite activist said such talk amounted to “absolute bollocks”. The problem, as some of his workers see it, is that he is cutting them loose from the very values he affects to believe in.

Half an hour’s drive from Port Sunlight, 30 or so workers from the Unilever plant that makes Persil and Surf washing powder were also on strike. At around 1pm, they received word that having seen their banners on Twitter, the company wanted them removed from the factory’s outer wall. One of the choicest was moved to other side of the road: “Unilever hangs Persil workers out to dry.”

Standing sentry outside the factory was Mark Armitage, a 45-year-old process operator and GMB steward, who angrily recalled how his pension contributions went up from 5% to 7%, supposedly to keep the final-salary scheme open. “We were told that if we took those measures, it would safeguard it,” he says. “That was three years ago; they then told us they couldn’t afford what they’d agreed. But that’s got nothing to do with it: this is all about a global policy they came up with behind closed doors. That’s what we’re angry about. This is a company that’s making billions, and we’re not asking for anything more than we were promised.” His gut feeling, he said, was that there were more strikes to come.

Whether what he said next was intended to evoke Lever wasn’t clear, but it sounded like it. “The company shouldn’t be doing this,” he said. “They should be leading by example.”

“Personally, I would value an in depth look at the work programme – people’s experiences of it for better/worse. We certainly need work programmes – but how successful is the present one?”

It’s taken a while, but with the help of the requisite agencies, we’re going behind the scenes at the Work Programme in the Cheshire town of Warrington. With the aid of such independent providers as A4e and G4S, the government has said it wants get people off benefits and into paid employment. By way of doing so, partly via so-called “mandatory work activity“, it has expanded an array of work experience schemes that began under the last government.

Now, we want to shine light on how the coalition’s avowed aim of getting so many people into paid employment fits with such tough times, and what people on the receiving end think of how it’s going.

Before we go, we need the input of Comment is free users, particularly when it comes to direct experience of what the Work Programme does. Are you participating in it? Has the Work Programme sped your entry into work? Particularly in parts of the country that are really feeling the pinch, how do you think the government’s plans fit with the job market? Oh, and anyone from Warrington is particularly welcome to contribute.